7 Best Loans For Single Mothers
Last Updated on June 20, 2024 by Wade
Loans can save single mothers from financial disaster. It can keep you from losing your home, your car, and possibly your sanity.
While many people try to say that getting a loan is a horrible idea, that’s simply not true. It’s all about the type of loan you choose, how you secure it, how you use it, and of course, your commitment to paying it back.
Types Of Loans
There are a few types of loans single mothers can consider when they need a financial boost or just temporary relief when financial troubles come their way.
Home Loans
Most people cannot purchase a home with cash. A home loan makes it possible for people to own a house by paying a mortgage.
Emergency Loans
Life happens & so do unexpected crises! If you are in need of an urgent loan, It could be worthwhile looking into Emergency loans as these have been created for just that reason. They are great to help you solve a problem or overcome a difficult time.
Auto Loans
Most people need a car to get to work, shop for groceries, and take their children to school. Cars can be expensive when you are on a small budget, but there are ways to get an easy car loan. Like buying a house, you got to keep up your payment, if you get an auto loan, but it’s extremely helpful to many families.
With that said, you don’t want to get blindsided when it comes to monthly payments. Getting your loan preapproved is the easiest way to avoid this trap, as you’ll instantly know what cars you can afford. If you need help deciding on a preapproved car loan, use MarketWatch’s loan comparison calculator that populates rates based on your credit score and income.
Business Loans
Owning your business is a great way to achieve success in your career. It takes money to make money though, so business loans help you get that start in the business world.
Financial Loans
Student Loans
These loans are to help people seek higher education. According to the CollegeBoard, people who have a bachelor’s degree or higher end up earning more in their lifetime.
Bad Credit Loans
Just because you have bad credit doesn’t mean you can’t secure a loan. While it might be harder, there are plenty of decent bad credit loans available. These are specifically to help people who have made financial mistakes in the past and might not have a great credit score. These bad credit loans can help people get back on their feet. As they are a higher risk for the lenders, as the default rate on these loans is higher, they usually naturally carry a higher interest rate.
Personal Loans
Bills can get out of control, and they can be overwhelming with high-interest rates. You can consolidate all of your accounts into one personal loan, which may carry a lower interest rate. This can save you a lot of money if you’d like to apply for a personal loan.
Student Loans
Stafford Loans
Stafford loans are those that help students who are enrolled in accredited institutions in the United States. Since these are to help students seek higher education, interest rates are lower and students don’t have to repay the loan until they graduate.
Even after graduation, students have six months before they are required to pay off their loans.
This helps students find employment to afford the repayment of the loan. If students do not graduate for any reason, they still must pay back the loan. But they still have the six-month grace period before they need to start paying for it.
Eligibility Requirements
This loan is available as subsidized and unsubsidized. Subsidized loans are for those who have financial needs. The federal government pays for the interest. Unsubsidized loans are for students who earn more money than the subsidized loans’ criteria. Students are responsible for paying all of the interest accumulated with that type of Stafford loan.
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When I applied for Stafford Loans as a single mother, filling out the FAFSA form was my first step. The FAFSA helps the government assess your financial situation, and based on that, they determine whether you qualify for a subsidized or unsubsidized loan.
Perkins Loans
Perkins loans help students who have a low income. They come with low-interest rates. This is a federally regulated loan program and only certain postsecondary institutions accept these types of loans for tuition payments. Currently, there are about 1,700 institutions participating. Students do not have to repay the loan until school they have been disenrolled. Those who choose to use their loan to seek a degree in teaching and then go on to teach in a low-income school may be able to have their loan deferred. In addition, students who are unable to seek employment to generate enough income to pay back the loan may be able to have the loan deferred. Loan deferment may be possible based on other economic hardship situations as well.
Eligibility Requirements
Perkins loans are for students who can demonstrate they are financially needy by completing the FAFSA form. Income limits for the Federal Perkins Loan Program change annually.
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I’ve personally navigated the world of Perkins loans and can tell you that for more details, you should check out the official Department of Education website. It’s where I found invaluable information when I was considering this option.
GRAD Plus Loans
GRAD Plus Loans offer money to students in financial need. This is the federal government’s U.S. Department of Education loan program. To use this loan, the school must be a Direct Loan Program participant.
Eligibility Requirements
Only graduate and professional degree students in financial need can use this type of loan. Parents of undergraduate students may use it. Borrowers cannot have an adverse credit history. The maximum loan amount depends on how much it costs to attend the institution minus any other financial aid received.
Website
For more information about GRAD Plus Loans, please visit the Department of Education website.
Private Education Loans
Private loans or Private Education Loans or Alternative Education Loans! This loan helps cover the costs the government financial aid and loan won’t pay for when seeking higher education. These loans are not governed by the federal government but are offered by private lenders.
Eligibility Requirements
For private loans, your credit score matters. If your FICO credit score is less than 650, you may not be able to secure a loan or you may receive one at a high interest rate. Cosigners can help with getting a loan because their credit scores will be taken into account as well. Keep in mind, that a difference of 30 to 50 points in a credit score can have a significant effect on loan terms.
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Most banks offer private loans for educational purposes. When I was researching private education loans, I found valuable information on websites like Finaid. These platforms can provide you with additional details to help you make informed decisions about financing your education.
Home Loans
FHA Loans
FHA loans are home loans governed by the Federal Housing Administration. This government agency is part of the Housing and Urban Development Department. Since the government insures these loans, the cost to homeowners is significantly less than going through private lenders. Other benefits of FHA loans include being able to have a lower downpayment, lower closing costs, and credit qualification is often easier.
Eligibility Requirements
All FHA loan applicants must have a social security number. They must be legal United States residents. Besides, they are also over the legal age to purchase a home. FHA home loan lenders check income, debt, credit, and assets to determine whether not the potential homeowner can afford the monthly mortgage. If it is determined the applicant can’t afford the monthly mortgage, the loan will not be given. A credit score does not affect whether or not you get the loan, but it does affect the interest rate.
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Visit the Housing and Urban Development website for more information about FHA loans. For more housing loans, assistance, and ideas, please visit our Housing Assistance For Single Mothers article.
Personal Loans
Secured Loan
A secured loan is one in which the borrower sets up collateral. This collateral is taken away if the borrower defaults on the loan. The bank can then sell the collateral to make up the money from the loan.
Eligibility Requirements
I’ve personally explored secured loans as a single mother seeking financial stability. Secured loans can be a great choice, especially if you have decent credit. However, keep in mind that the loan amount you can secure depends on the collateral you provide, which I learned through my own experience.
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Drawing from my own financial journey, I can tell you that most banks, including institutions like Bank of America, provide personal loans to their customers. When it comes to secured personal loans, a visit to your local bank can offer you valuable insights and personalized advice, as I discovered.
Unsecured Loans
Unsecured loans are much like secured loans, but the borrower does not have to offer collateral.
Eligibility Requirements
Since collateral is not offered, it can be challenging to be approved for an unsecured loan, especially if applicants have a low income or poor credit history. The loan amount people can get depends on income and credit history.
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Unsecured loans are available through banks in your local area.
Fast Cash Advance
A fast cash advance offers cash to those in financial need. This type of loan comes at a high-interest rate. Many companies offering fast cash advance services will require collateral in case of default. Repayment of the loan must be done as soon as possible. The longer it takes borrowers to pay back the loan amount, the more money they need to pay back and some people end up with a large sum of debt because of it.
Eligibility Requirements
Borrowers are United States residents. They also must complete an application to receive cash and any information needed for the collateral.
Website
For more information about Fast Cash Advance, visit the Fast Cash website.
Christian Lending
Christian lending is offered by organizations whose belief is that giving money to those with financial needs to be able to make ends meet is the right thing to do.
Eligibility Requirements
Let’s explore the concept of Christian lending, something I looked into when I faced financial challenges. Christian lending organizations understand that life can be tough sometimes. To access their assistance, you’ll typically need to demonstrate your financial need and provide details on how you intend to use the funds, such as for essential needs like shelter, food, transportation, or utility bills—a process I’ve gone through.
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While many organizations offer Christian lending, the most popular one is America’s Christian Credit Union. You can apply for a loan on the website.
Second Chance
Let’s delve into ‘Second Chance’ loans—a financial option I explored when my credit history hit a rough patch. These loans are designed for individuals with less-than-ideal credit. The idea behind them is to acknowledge that life can throw us curveballs, and sometimes we need that second chance to get back on track financially.
Once approved, the money needed goes into a share account. Once borrowers earn money from their employment, the money gets deposited into the share account, and as the loan gets paid off, savings are also accrued. By the time the loan is paid off, the borrower would have improved upon their credit scores and built savings.
Eligibility Requirements
Eligibility is determined by looking at credit history and income to determine whether applicants are good candidates for the program. The maximum borrowing limit is $500.
Website
While there are many financial institutions offering this type of program, you can learn more about Tarrant County Credit Union’s Second Chance Program on its website.
Home Equity
Drawing from my own experience as a homeowner, let’s discuss home equity loans, a financial tool I considered for various purposes, including home improvements, medical bills, and my child’s college tuition. It’s crucial to understand that when you take out a home equity loan, your home serves as collateral. This means that if you face challenges in repaying the loan, you risk losing your house. Additionally, it’s important to note that any increase in your home’s value due to equity may not be accessible when you decide to sell, as it may be used to pay off the loan, a detail I learned firsthand.
Eligibility Requirements
Interested borrowers must have a good credit history. Loan-to-value ratios must be good too.
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The bank that handles the home mortgage can offer home equity loans, or you can check with other financial institutions such as Wells Fargo.
Emergency Loans
Payday Loans
Let me share my insights about payday loans, something I turned to during a tough financial spot. Payday loans don’t demand collateral, and they don’t scrutinize your credit score either. Your loan amount is typically based on your income, and I’ve been through the process myself. When receiving the loan, you will receive a payback date. This is usually on the day of your next payday. You must pay the amount you borrowed plus interest at this time.
Eligibility Requirements
Income determines whether you are eligible. If borrowers have enough money at payday to pay back the loan they ask for, they can usually get that amount. For those who would like to get the loan online, they must have an active bank account to have the money transferred to it.
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There are a few payday loan companies around the United States and online. One of the most popular ones is ACE Cash Express.
Car Loans
Precomputed Loans
Pre-computed loans are not the most favored type of loan because they calculate all interest borrowers pay over the loan term and add it automatically into the loan. This means borrowers will not benefit from paying off the loan early. Borrowers are penalized for paying the loan off early. When borrowers make a payment, it goes to the interest first, and it will only go to the principal after the claim is paid off.
Eligibility Requirements
The eligibility for pre-computed loans is the same as many other standard loans. Borrowers must have decent credit and provide income information showing they will be able to make the payments each month.
Website
Many financial institutions offer this type of loan. You can learn more about it on the Bank Rate website.
Car Equity Loans
Let me share insights into car equity loans, also known as pink slip loans or you-drive loans—a financing option I considered when I needed some extra funds. With car equity loans, you leverage your vehicle as collateral, allowing you to access cash.
However, it’s crucial to understand the stakes involved. If you struggle with loan repayment, there’s a risk of losing your vehicle. These loans typically come with a repayment window of 36 months, and the minimum loan amount is $2,600. You also have the flexibility to pay off the loan sooner, a feature I found valuable.
Eligibility Requirements
The vehicle used as collateral has to have a free and clear title. The vehicle needs to be worth at least $5,000 and you must have insurance. Interested borrowers must also have proof of employment and provide a copy of a phone and utility bill with the current address. A spare key to the vehicle must be handed over when cash is given.
Website
The Car Equity Loans website offers this type of loan. Please visit the website for more information.
Auto Title Loans
Auto title loans, which some folks refer to as car title loans or pink slip loans, work by using your vehicle’s title as collateral. I’ve had personal experience with these loans and can provide some insights into how they function. The lender places a lien on the car title and takes the title in exchange for the cash. When the loan is paid back, the car title is returned to the borrower. If the borrower defaults on the loan, the lender takes the vehicle and sells it to recoup the loan money. These loans carry a high-interest rate.
Eligibility Requirements
Lenders who offer auto title loans do not check people’s credit. The only eligibility requirement is that the borrower has a vehicle’s title and gives them permission to put a lien on it.
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Lenders for car title loans can come from Wells Fargo and many other financial institutions.
Business Loans
SBA Loans
Let me share my experience with SBA loans, a lifeline for aspiring entrepreneurs like me. Starting a business often requires more capital than we have at hand, and that’s where SBA loans come in. These loans are a godsend, especially if you’re facing challenges securing a traditional bank loan. Trust me; they can be a game-changer in your entrepreneurial journey. These loans are offered through local banks and other lending institutions.
Eligibility Requirements
The government represents SBA loans, so there are some eligibility requirements for each type of loan. The types of loans available are:
- Basic 7(a) Loan Program
- Certified Development Company (CDC) 504 Loan Program
- Microloan Program
- Disaster Assistance Loans
- Economic Injury Loans
- Export Express
- Export Working Capital
- International Trade Loans
- Military Reservist Economic Injury Disaster Loan
- CAPLines
- Pollution Control Loans
- U.S. Community Adjustment And Investment Program (CAIP)
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Having navigated the world of SBA loans during my entrepreneurial journey, I can vouch for their significance. If you’re keen to explore further, I recommend visiting the official Small Business Administration website. It’s a valuable resource where I found guidance and support when I ventured into the realm of SBA loans.
Working Capital Loans
Working capital loans play a crucial role in sustaining business operations, something I’ve experienced firsthand while managing my own small business. These loans provide the cash needed to cover short-term financial obligations, ensuring smooth day-to-day operations. However, when financial challenges hit, having access to working capital becomes even more vital. This is how working capital loans help business owners.
Eligibility Requirements
Working capital should be available in a business at all times, so the lender will look at the finances of a business to determine if this is a temporary problem or if it’s something that will continue to be one. The working capital loan is one that is supposed to be used to take care of momentary problems as the business gets back on its feet to handle the finances on its own and pay back the loan. Since every business is different in the number of obligations it has and revenue history and future, eligibility is on a case-by-case basis.
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For more information about working capital and loans to help during financial hardships, go to the Small Business Administration website.
Hard Money Loans
Let’s dive into the world of hard money loans, something I explored when real estate investments were on my mind. These loans are secured by assets, and the loan amount is tied to the value of those assets. However, it’s crucial to understand that hard money loans often come with higher interest rates due to the risk involved, a lesson I learned firsthand. Only private investors or companies are willing to provide this type of loan. Most often, hard money loans are for large projects that take months or years to complete.
Eligibility Requirements
Eligibility varies a great deal depending on the lender and the purpose of the loan. Most lenders will consider credit scores and income in relation to what the borrower wants to do with the money.
Website
Since only private investors and companies offer these loans, borrowers must seek them out. Visit the BiggerPockets page to get these loans’ directories.
Peer-to-Peer Loans
A peer-to-peer loan is popular with investors because it gives money to a business owner who they believe will be successful. These loans are also referred to as person-to-person lending, peer-to-peer investing, and social lending.
I’ve had the opportunity to explore peer-to-peer loans firsthand, and they’re quite different from traditional loans. With peer-to-peer lending, you bypass the usual financial institutions, and everything happens in the online realm. Let me share some insights into this modern approach to borrowing.
Eligibility Requirements
There are no eligibility requirements for these loans. Business owners propose what they want to do with a loan and investors decide if they want to invest in it.
Website
There are a few websites catering to peer-to-peer loans. Prosper is a popular website to find investors interested in providing these loans.
Startup Business Loans
Start-up loans
Let me share my own experience with startup loans as a single mother dreaming of launching my own business. Startup loans are a lifeline for folks like us who have big dreams but lack the immediate funds. You’ll find these loans offered through the Small Business Administration (SBA) and often available at your local banks and credit unions. There are two types of loans:
- 7(a) Loan Program – This is the most popular one. Business owners can get up to $750,000. SBA backs part of it.
- 504 Loan Program – This loan’s money generally purchases assets such as property or equipment.
Eligibility Requirements
Each loan has its own eligibility requirements. You need to consult the SBA website to find out which types of businesses qualify for these loans.
Website
For more information about start-up loans, go to the SBA website.
